Introduction

On November 9, 2012, the Ontario Securities Commission released
OSC Staff Notice 51-720 Issuer Guide for Companies Operating in
Emerging Markets (the "Guide").

The Guide is one of the steps the OSC is taking to address
concerns regarding issuers operating in emerging markets and is
designed to help directors and management more effectively
discharge their responsibilities. In addition to identifying
potential risk areas, the Guide provides suggestions for directors
and management to consider in addressing those potential risks in
their businesses. It also sets out the OSC's expectations of
emerging market issuers in relation to disclosure requirements and
provides examples of the level of detail that should be provided in
disclosure documents. The OSC has also committed to working with
regulatory partners to develop guidance and standards to protect
investors in emerging market issuers and in that respect, the
Toronto Stock Exchange and the TSX Venture Exchange are also
completing guidelines to further address the risks associated with
listing emerging market issuers.

Specific Areas to Consider:

The Guide identifies and discusses the following eight areas for
issuers operating in emerging markets to consider:

1. Business and Operating Environment

Directors and management of an emerging market issuer must have
a thorough understanding of the political, cultural, legal and
business environment of their foreign operations. An issuer's
directors should work to close any knowledge gap that may exist in
relation to the issuer's operating environment. Furthermore,
all directors must have an understanding of Canadian regulatory
requirements. If directors or management do not have an
understanding of these requirements, they should work to gain the
requisite knowledge. With respect to an issuer's ongoing
disclosure requirements, the disclosure should explain the business
and operating environment and identify specific risks associated
with operating in the relevant emerging market jurisdiction.

2. Language and Cultural Differences

It is important that the issuer have board members that have
experience in the emerging market. If the board does not have any
members familiar with the language and culture of the emerging
market,there should be policies in place to deal with this issue,
for example through the use of independenttranslators. The
directors should also develop procedures for obtaining information
from independentsources, distinct from local, non-independent
directors and management.

3. Designing an Appropriate Corporate
Structure

Directors and management need to be aware of legal and
regulatory systems in the emerging market which may restrict
foreign ownership and control. The use of complex corporate
structures to deal with these restrictions can create additional
risks. Management should carefully assess these structures and
consider whether a simpler structure can be used to achieve the
issuer's objectives. An issuer's disclosure should contain
a comprehensive description of its corporate structure, the purpose
for the structure and the benefits and risks associated with the
structure.

4. Related Party Transactions

Due to different business practices, cultural norms and legal
requirements in emerging markets, related party transactions may
have a greater risk attached to them. Directors and management need
to establish policies and procedures to identify and manage related
party transactions and there should be comprehensive disclosure of
them, so investors can properly evaluate related party transactions
and their impact on the issuer's operations and financial
results. The issuer's procedures for evaluating and approving
related party transactions should also be disclosed.

5. Risk Management and Disclosure

Directors should adopt a written mandate that explicitly
acknowledges their responsibility for, among other things,
identifying and overseeing business risks. It is important that
directors understand the risks associated with operating in certain
jurisdictions and how those risks impact corporate operations and
assets, and in particular, they should focus on risks that may have
a significant adverse impact on business operations. For example,
the issuer may face risks such as political instability,
expropriation or nationalization of assets, foreign exchange
controls or corruption. The issuer's disclosure should describe
in sufficient detail the risks involved in operating in the
emerging market, the potential effects of those risks and the
processes in place to deal with them.

6. Internal Controls

Directors should adopt a written mandate that explicitly
acknowledges their responsibility for the issuer's internal
controls. An issuer operating in an emerging market should have
particularly strong internal controls for financial reporting, due
to the separation of management from the operations in the emerging
market. The audit committee should actively oversee, monitor and
mitigate any weaknesses in internal controls. Disclosure of
material weaknesses in internal controls must be made and
sufficient information should be provided so investors can properly
evaluate them.

7. Use of and Reliance on Experts

There may be risks associated with using an expert in the
emerging market. When an expert is used, the board should evaluate
the expert's credentials, specialized knowledge and the level
of diligence exercised by the expert. Related disclosure should be
accurate and sufficient for investors to understand the role played
by the expert.

8. Oversight and External Auditors

The audit committee must determine whether the external auditor
is competent and able to deal with matters in the emerging market.
If the domestic auditor has delegated some of its work to a foreign
auditor, the audit committee should look at the foreign
auditor's competence, the oversight provided by the domestic
auditor and the division of responsibility between the two
auditors. The audit committee should maintain frequent informal and
formal communication with the external auditor, paying particular
attention to delays or unusual management intervention in the audit
process.

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